Farming and Farm Income
American agriculture and rural life underwent a tremendous transformation in the 20th century. Early 20th century agriculture was labor intensive, and it took place on many small, diversified farms in rural areas where more than half the U.S. population lived. Agricultural production in the 21st century, on the other hand, is concentrated on a smaller number of large, specialized farms in rural areas where less than a fourth of the U.S. population lives. The following material provides an overview of these trends, as well as trends in farm sector and farm household incomes.
Gross cash farm income (GCFI) is annual income before expenses. It is the sum of cash receipts, farm-related cash income, and Government direct farm program payments. GCFI is forecast at $510 billion in 2021 and $512 billion in 2022, versus $362 billion (inflation-adjusted 2022 dollars) in 2001, with the increase across time mainly due to higher cash receipts. GCFI in 2021 is forecast to increase 6.6 percent relative to 2020 (reaching the highest level since 2014), and it is forecast to grow another 0.4 percent in 2022.
Gross farm income reflects the total value of agricultural output plus Government farm program payments. Net farm income (NFI) reflects income after expenses from production in the current year and is calculated by subtracting farm expenses from gross farm income. NFI considers both cash and noncash income and expenses. In 2021, inflation-adjusted NFI is forecast to reach $123.4 billion, increasing 20.1 percent relative to 2020. It is then forecast to decline 7.9 percent to $113.7 billion in 2022 yet remain above its 2020 level. These NFI levels would be the highest since 2013 (inflation-adjusted 2022 dollars). Farm production expenses are projected to increase by 5.1 percent in 2021 relative to 2020 and then increase another 1.5 percent in 2022 (inflation-adjusted 2022 dollars).